The Murray-Darling Basin Balanced Water Fund is seeking additional equity capital as it continues to provide sophisticated investors with the opportunity to secure investment in Australian water markets.
As of 31 August 2019, the fund reported $58.50 million in assets under management, delivering an annualised return of 17.95% since inception in 2015.
The fund trustee reports that $29.7 million, including $7.8 million of debt, has been raised and a follow-on offer is open for additional equity capital.
By investing in permanent water rights in the southern Murray-Darling Basin (sMDB), the fund provides the first opportunity in Australia for eligible investors to achieve the multiple objectives of securing water for agriculture, realising a financial return and restoring threatened wetlands through a single investment.
Since inception until 30 June 2019, donations of cash and water from the fund have enabled the delivery of 3315ML of water, including from the Commonwealth Environmental Water Office, to 21 wetlands across Victoria and New South Wales through eight watering events.
Investment in water entitlement and water allocation assets provides an opportunity for low-risk exposure to the growing global demand for agricultural commodities via supply of the key limiting factor in nearly all food and fibre production systems – water.
Australia’s political stability, strong history of supporting property rights and commitment to improving the transparency of water access together provide significant strengths for Investors. The sMDB is considered one of the world’s largest and most sophisticated water markets.
The fund has been designed to achieve optimal financial and environmental outcomes at a scale of $100 million and above. Equity returns over a 10-year tenure are targeted at between 9% and 12% p.a. (before tax). It offers an asset-backed investment with low correlation to equity and fixed income markets, and exposure to high-value agriculture with limited commodity risk.
Given potential cyclical movements, Kilter Rural considers water within the context of a medium to long term investment horizon. As part of a broader portfolio, water can provide diversification and risk mitigation as it is a source of returns that is uncorrelated with traditional investment asset classes.
Kilter Rural is seeking to expand investor participation in the Fund. In connection with this offer the Trustee has issued an updated Information Memorandum dated 30 October 2019, which could be further amended from time to time.